NATIONAL AFFAIRS: Deregulation and water could be a tragedy for National Party

by Patrick J. Byrne

News Weekly, March 22, 2003

Sugar deregulation and the removal of farmers' water allocations in several states could prove to be a tragedy for the National Party.

Investment in cane harvesters is a key industry barometer. Orders used to be around 160 p.a. until partial deregulation in 1996. In 2001 only 15 were sold. In 2002 it dropped to nine, and this year only five have been ordered, just one for Queensland.

A Memorandum of Understanding (MOU) between the Federal and Queensland governments was signed last September 25 by the National's Federal Agriculture Minister, Warren Truss, Queensland Minister for State Development, Tom Barton, and Queensland Minister for Primary Industries and Rural Communities, Henry Palaszczuk.

Clause 8 and 9 of this MOU commits both governments to support deregulation of the cane production area system and the statutory bargaining system that has allowed farmers to collectively bargain with the crushing mills on the price of cane each season, under the Queensland Sugar Act.

Partial deregulation in 1996 has forced the industry to sell its sugar into the domestic market at the corrupt world price. No other sugar producing country does this.

Planned further deregulation will see enormous bargaining power shift to the millers. The Queensland government is moving in this direction, for political reasons.

It appears that Premier Beattie and his Federal counterparts have calculated that it will be the Nationals that will bear the brunt of grower unrest in the sugar electorates.

Warren Truss has strongly backed deregulation and signed the MOU, despite the National Party's National Conferences repeatedly voting to oppose further deregulation, and despite the Queensland State Nationals strongly opposing deregulation.

Deregulation is likely to cost the Nationals at the next Federal and Queensland elections. Queensland Labor may also lose a few seats, but they and independents are likely to pick up current National Party seats. Labor could increase its huge parliamentary majority.

On the water rights issue, if the National Party does not stand up on the arbitrary removal of farmers' water allocations in the Murray Darling Basin, the damage to the Nationals could spread. Although water is a state issue, the decision will be made by the Federal and State governments at the Council of Australian Governments (COAG) meeting later this year, and the Federal Nationals' role will be closely watched in the farm sector.

Water is a highly sensitive issue, particularly as farmers are coming out of a serious drought, the rising Australian dollar is making many of our rural exports less competitive and Federal driven National Competition Policy has had its worst effects in the regional areas.

While in NSW the Nationals and Liberals hold most of their Federal seats by sizable margins, two independents have taken Calare and New England by large margins.

If more high profile independents run in NSW and if a third rural-based political force emerges in Queensland, riding on rural and regional anger at 20 years of deregulation, it will be a tragedy for the Nationals.